ROPE & High Networth Individual (HNI)
Mission-aligned investment has led to the creation of 1200+ jobs over 13 years, resulting in tangible asset creation + significant improvement in the quality of life for ROPE’s creative producers.
High Networth Individual (HNI)
Impact-first capital is investment capital (debt or equity) that prioritises people and planet goals over financial returns; it is capital designed to support high-impact enterprises that struggle to raise suitable financing because they are too early-stage or otherwise risky, expect to generate only modest returns, or require a longer investment time horizon.
— Catalytic Capital Consortium
No fixed duration since the investor is a co-founder
₹8 Cr - ₹24 Cr
($1 million - $3 million)
NO. OF ARTISANS
1001 - 1500
ROPE International is one of the largest direct manufacturers and exporters of handmade basketry and home decor products in India. ROPE drives large scale manufacturing of handcrafted products in Tamil Nadu while empowering women from rural families with employable artisan skills; these women were previously either unemployed or underemployed in agriculture or were engaged in underpaid jobs in hazardous granite mines and fireworks factories.
A core aspect of ROPE’s mission has been to formalise artisan employees, mostly women, by offering safe and regular employment as well as access to social protections.
ROPE is committed to striking a balance between growth and profitability, and building inclusive systems of sustainable production. Its creative manufacturing model combines artisan skills with contemporary product development, and thereby ensures global retail clients and a healthy bottomline. An adherence to responsible production and global standards in social and quality compliance contribute to a reduced carbon footprint, and better ecological and environmental health.
Despite their outsized impact, ROPE had to contend with cash flow and working capital constraints due to lack of timely and easy access to credit, expensive debt capital, and delayed payments. Growth capital for business expansion was also hard to come by with investors pushing back against asset-heavy investments like land and manufacturing infrastructure. Traditional investors who came onboard early on in ROPE’s journey were focused on high returns and a quick exit, which were in direct conflict with the enterprise’s long-term commitment to both people and planet.
Traditional investors who came onboard early on in ROPE’s journey were focused on high returns and a quick exit, which were in direct conflict with the enterprise’s long-term commitment to both people and planet.
One of ROPE's early investors, an HNI, eventually took on the role of the anchor investor and co-founder bringing in additional capital and business support. He extended impact-first capital to the tune of ₹3.52 crore ($440,000) in 2016 - 17. He understood that enterprise would need time to steady itself, invest in the resources it needs and grow at a reasonable pace while maximising its livelihood impact. He also realised the need to guard against mission drift and stepped in to co-create and build ROPE’s vision with its team with a long-term view.
The investment was long-term and deployed in multiple tranches against mutually agreed upon goalposts linked to revenue growth, profitability, onboarding a certain number of key account buyers, and increased impact on ground.
The timely infusion of investment helped create 1200+ jobs, both directly and indirectly. Of these, more than 300 were full-time, regular jobs with social security and insurance benefits. More than 3,000 rural women received skills training in various hand weaving techniques. This has also helped ROPE rejuvenate, expand and invest in infrastructure and acquire more buyers.
For each job created, there is an average 50% increase in gross income for the individual corresponding to approximately ₹160 ($2) per day additional earnings.
Over a period of 13 years, this has resulted in tangible asset creation and a significant improvement in the quality of life for ROPE’s creative producers. Better housing, better education for their children, higher amounts of savings in the form of land or jewellery, better or new toilet facilities at home, and better health indicators are a few measures of impact. Intangible benefits include greater respect within the family, better self-confidence, and a more empowered life.
The infusion of catalytic capital also helped ROPE expand without drifting from their mission. They were able to successfully meet infrastructure and compliance requirements. ROPE has since evolved to become a steadily growing social enterprise with big ticket, international clients who give them steady orders and steady work. Over the next four to five years, ROPE’s projected turnover will hit ₹48 crores ($6 million) while impacting more than 15,000 livelihoods. This healthy, patient transformation has made ROPE a viable proposition for other investors.
“ROPE is fortunate to have found an impact investor who came on board as a co-founder. He is patient, allows his funds to play a catalytic role in discovering the strengths and potential of the enterprise, is a co-traveller in the journey, listens, trusts, and learns from the team. He knows and understands the path we are on and pushes us to steadily build the business without compromising on impact.”
— SREEJITH NEDUMPULLY, CO-FOUNDER & DIRECTOR, ROPE
Provide patient, impact-first capital and hands-on support that prevents mission drift and enables the enterprise to be the best version of what it can be.
Features of catalytic capital in this case:
Patient: Investor understands that sustainable growth and profitability would require investment in HCM's business model and supply-side capabilities to the point where they can attract established, high paying retailers and thus took a long term view to help the enterprise go from strength to strength.
Risk Appetite: Unlike asset-lite, app-based startups the HCM needed to invest in asset-heavy requirements like land and machinery to achieve growth and impact. Thus, the investor provided multiple infusions of capital over time and was willing to absorb significant losses without bringing in additional investors to ameliorate the risk.
Purpose-Aligned: Unlike traditional VCs, the investor actively protects and guides the enterprise, allowing it to stay true to its mission where the focus was not about exits but goals around revenue growth and livelihoods.